466 ANNUAL REGISTER, 1810. 



standing at a given amount, there 

 will remain permanently out in cir- 

 culation a corresponding amount 

 of paper ; and if the amount of dis- 

 counts is progressively increasing, 

 the amount of paper which remains 

 out in circulation over and above 

 what is otherwise wanted for the 

 occasions of the public, will pro- 

 gressively increase also, and the 

 money prices of commodities will 

 progressively rise. This progress 

 may be as indefii»ite as the range 

 of speculation and adventure in a 

 great commercial country. 



It is necessary to observe, that 

 the law, which in this country li- 

 mits the rate of interest, and, of 

 course, the rate at which the bank 

 can legally discount, exposes the 

 bank to still more extensive de- 

 mands for commercial discounts. 

 While the rate of commercial profit 

 is very considerably higher than 

 five per cent, as it has lately been 

 in many branches of our foreign 

 trade, there is in fact no limit to 

 the demands which merchants of 

 perfectly good capital, and of the 

 most prudent spirit of enterprize, 

 may be tempted to make upon the 

 bank for accommodation and faci- 

 lities by discount. Nor can any 

 argument or illustration place in a 

 more striking point of view, the 

 extent to which such of the bank 

 directors, as were examined before 

 the committee, seem to have in 

 theory embraced that doctrine 

 upon which your committee have 

 made these observations, as well 

 as the practical consequences to 

 which that doctrine may lead in 

 periods of a high spirit of commer- 

 cial adventure, than the opinion 

 which Mr. Whi'more and Mr. 

 Pearse have delivered ; that the 

 same complete security to the 

 public against any excess in the 



issues of the bank would exist if 

 the rate of discount were reduced 

 from five to four, or even to three 

 per cent. From the evidence, 

 however, of the late governor and 

 deputy governor of the bank, it 

 appears, that though they state 

 the principle broadly that there 

 can be no excess of their circula- 

 tion, if issued according to their 

 rules of discount, yet they disclaim 

 the idea of acting up to it in its 

 whole extent; though they stated 

 the applications for the discount 

 of legitimate bills to be their sole 

 criterion of abundance or scarcity, 

 they gave your committee to un- 

 derstand, that they do notdiscount 

 to the full extent of such applica- 

 tions. In other words, the direc- 

 tors do not act up to the principle 

 which they represent as one per- 

 fectly sound and safe, and must be 

 considered, therefore, as possess- 

 ing no distinct and certain rule to 

 guide their discretion in controlling 

 the amount of their circulation. 



The suspension of cash pay- 

 ments has had the effect of com- 

 mitting into the hands of the direc- 

 tors of the Bank of England, to be 

 exercised by their sole discretion, 

 the important charge of supplying 

 the country with that quantity of 

 circulating medium which is ex- 

 actly proportioned to the wants 

 and occasions of the public. In 

 the judgment of the committee, 

 thatis a trust, which it is unreason- 

 able to expect that the directors 

 of the Bank of England should 

 ever be able to discharge. The 

 most detailed knowledge of the ac- 

 tual trade of the country, combin- 

 ed with the most profound science 

 in all the principles of money and 

 circulation, would not enable any 

 man, or set of men, to adjust and 

 keep always adjusted, the right 



